Monthly Archives: January 2011

Oklahoma is not the first state to fire fraud investigators en masse during the current economic downtown.

It is the first, though, to do so with the explanation that investigating claims fraud is not the business of the state.

Six of nine investigators got the axe yesterday — all six dedicated to investigating claims fraud.

Randy Brogdon, the deputy commissioner of insurance who recommended the firings was quoted in the local newspaper:

“The companies need to handle their own claims. Investigating policyholders is not a function of the Insurance Department.”

We respectfully disagree. The state law creating the fraud unit clearly says its function is to investigate any violation of Oklahoma’s insurance fraud statute, which includes claims fraud.

It’s a bit surprising that Mr. Brogdon doesn’t know this since up until a few weeks ago he was a state senator.

Following the firings, one of the soon-to-be displaced investigators was quoted as saying “If I were going to commit insurance fraud in Oklahoma, I would feel pretty confident I could get by with it.”

That’s not a message you want to send to a public that’s already too tolerant of unethical behavior when it comes to insurance.

And at the same time, insurers are being told fraud doesn’t matter. There’s no government agency to take your cases, so just pay the claims and increase your rates.

Insurers in the state are required to pay an annual assessment of $750 to fund the unit. They also are required to report any suspected fraud to the DOI. So . . . why would this regulation be in place if they fraud unit was not created to investigate claims fraud?

Nearly every other state has an active fraud bureau that partners with insurers and others to keep fraud in check. We’ve seen insurers increase investment in anti-fraud in states that adopt good laws and create effective fraud units. This partnership not only helps to detect, investigate and prosecute insurance crime, but the data suggest it creates a deterrence as well.

Oklahomans will end up paying more for insurance, no doubt. We encourage the insurance department to reconsider this decision.

When the creation of Medicare was being debated back in the 1960s, medical groups voiced concern that the government was going to use its powers to deny payments and unfairly squeeze doctors. To appease the medical lobby, Congress severely limited the ability of the government to deny payments to doctors and others, and even to launch investigations.

In essence, Medicare merely became a claims processing system.

Over time as abuse and fraud grew, Congress was pressured to give HHS and the Department of Justice some leeway to go after fraud. But their method — pay and chase — was an inefficient model that never discouraged fraud or recaptured much of the treasury that was lost to scam artists.

The growth of organized fraud rings during the last ten years placed more strain on government resources to fight what some have estimated a $60-billion year drain.

HHS lacked the authority (and at times, the willingness) to deny providers entry into health programs or stop claims payments when fraud was suspected.

New rules announced today changes all of that. HHS now has the authority to shut out fraudulent providers before they have a chance to scam the government. Officials can also halt payments immediately when fraud is suspected.

An even more aggressive step, the HHS Secretary will have the authority to invoke a moratorium on accepting new applications from specific specialties to allow investigators to get ahead of emerging fraud trends.

HHS and DOJ have the three key elements to fight fraud that have been missing in the past — resources, authority and a commitment. These things in concert with new technology, consumer education and partnering with the private sector, should turn the corner on fraud against health programs — and save billions of dollars in the process.

UPDATE: Earlier today, the Coalition shared the stage with HHS Secretary Kathleen Sebelius as she announced the new anti-fraud procedures. The news conference can be viewed on the HHS website. The Coalition also issued a statement in support of the new rules.